The evolution of the automotive industry poses a lot of challenges especially when it comes to sports and supercars that for their nature are created to offer something more than just moving from A to B.

It is a different concept of driving. Emotions, thrill, and excitement are the cores around which a car is built. And they come in different forms.

Design, performance, sound are the three main drivers of these emotions, and as Lamborghini’s CTO Maurizio Reggiani in a recent TEDx claims, electrification poses the biggest challenges to these very characteristics that have become the distinguishing factors of this sector. Especially when it comes to weight, drivers’ engagement, sound, and even design.

R&D

According to OICA, the automotive industry invests around €85 billion yearly in Research and Development, making it one of the strongest innovators in the world. So, R&D spending is a big component of each company’s annual financial report. But there is, in fact, a substantial difference between low-volume and mass-produced car manufacturers, as shown in the graph below that compares Aston Martin and Ferrari to other large luxury and non-luxury high-volume European Groups.

AUTOMOTIVE COMPANIES R&D EXPENDITURE AS A % OF NET REVENUES (2019-2020)

While Lamborghini does not disclose exact R&D-related figures, a few years back, upon launching the Huracán, Stephan Winkelmann claimed 20% of their turnover was dedicated to Research and Development. Also, when announcing the company’s new strategy ‘Cor Tauri’, he claimed R&D spending would increase to €1.5 billion over 4 years. Considering a revenue superior, or in line with the €1.81 billion of 2019, in these next years, this would result again in an average of 20% of R&D spending as a percentage of the company’s revenue. The figure is aligned with the industry competitors for which the spending percentage is around four and a half times as much as mass-production automotive companies according to 2019-2020.

INNOVATION AT LAMBORGHINI: FORGED COMPOSITE

According to Reggiani, what is needed at this moment in the industry is not evolution, but a proper revolution. Automakers, even in this technology-driven segment, have been evolving a concept extracting more performance from a similar technology, at least most of the time.

Electrification instead, for all the characteristics mentioned at the beginning, requires a new vision.

This is what Luciano De Oto, former Director of Advanced Composites Lightweight Structures Development at Lamborghini claimed was achieved with the Forged Composite. Something that significantly changed the production process compared with previous techniques of carbon fibre composite moulding.

Regardless of specific definitions, however, the forged composite development is an emblematic case of how change is achieved in luxury performance automotive as both the companies that participated in this process are outside the industry. This innovation push often comes from unexpected sources. So, companies look for radically different approaches than the ones that a long-time automotive professional would adopt. On this topic, even Dallara’s CEO Andrea Pontremoli a while back, quoting a research made on over 1,000 entrepreneurs from different countries, explained how on average up to 70% of the innovation in different fields is driven from outside a company.

In the case of Lamborghini, the catalyst was the work done by Boeing with the Advanced Composite Structures Laboratory (ACSL) and successively by Callaway.

*Forged Composite exterior and interior components on Sesto Elemento and Huracán Performante

The laboratory was initially sponsored by Boeing with the Federal Aviation Administration for the development of carbon fibre composites for the company’s aircrafts. Soon in 2007, Lamborghini entered the partnership to sponsor the research on chopped carbon composites. And this was not unprecedented, as already in the 80s, Lamborghini had brought in engineers from Boeing exactly for their expertise in composite materials development.

Fast forward to 2009 and the ACSL pioneered a new material called Forged Composite because it was obtained with a press technology. At this point, from an aerospace company, the new technology was transferred to a golf equipment manufacturer, Callaway. Its collaboration with Lamborghini gave birth to the commercial use of the forged composite, showcased for the first time at the 2010 Paris Auto Show with the Sesto Elemento that featured the entire tub made of it.

The structure that initially collaborated with universities, in 2013 became a research unit for product development and application. Along with it collaborated the Advanced Composite Research Centre (ACRC) and the Carbonfaserverstärkter Kunststoff (CFK) centre, that from the initial development of the ACSL, turn the new materials into products that are then introduced to the market.

THE BENEFITS OF INNOVATION

This partnership brought numerous advantages that went beyond the mere implementation of the new material.

The forged composite was initially employed for its specific qualities. While less resistant than the carbon fibre with continuous weaves, the new composite allowed for great repeatability and high-quality results, with drastically increased volume and time-saving in the production process. When the previous process took several hours, the new one is a matter of minutes. Additionally, thanks to its malleability the forged composite can be easily shaped and offers much more freedom.

*Forged Composite applied to interior components

Significant engineering work has then gone into compensating for its lack of strength compared to the ‘regular’ carbon fibre that is still used extensively in every car.

Beyond this, however, the work with an aerospace developer gifted Lamborghini with a new testing process defined as Building Block Approach. By going through a pyramid of complexity in analysis and testing that minimises risks, Lamborghini managed to get the safety certification for the Aventador after just one crash test. While some competitors necessitated up to 48 crash tests for a single vehicle. This naturally translated into a significant time and cost-saving measure.

The second benefit of this collaboration was the TÜV’s certification. Technischer Überwachungsverein or Technical Inspection Association is an entity that inspects systems and processes to minimise hazards. Thanks to expertise transferred again from Boeing, Lamborghini was the first to receive this certification for the structural repair of carbon fibre by TÜV and other insurance companies.

Last but not least, as every automaker has realised, the carbon fibre that was initially “hidden” under the paint or interior materials in super sports cars, has become synonymous with performance and sportiness. This made it desirable. So, clients look for more carbon fibre aesthetic components. The trend reached its peak with the release of fully-exposed carbon fibre cars, like the Centenario or the Sesto Elemento. Following the trend, the forged composite too, as soon as it came along, became an aesthetic component both in the interior and exterior of the concept Asterion, the Huracán Performante, and more.

*In order from the left Sesto Elemento and Centenario showcasing exposed carbon body, and Asterion featuring forged composite exterior details

SOME HONOURABLE MENTIONS

Apart from the one described, there are numerous other examples of innovation coming from outside the automotive industry.

One source not discussed in this article but by no means less important is the University. To develop its vehicle of the future, the Terzo Millennio, Lamborghini targeted four main pillars, Energy, Innovation in Materials, Powertrain & Vehicle Architecture, Sound & Emotion. These four pillars were developed in collaboration with the MIT in Boston. And this is only one of the ongoing partnerships with major educational institutions around the world.

Lamborghini, of course, is not the only one in this respect. While companies such as Ferrari, McLaren, and now Aston Martin drive the majority of their innovation from their respective Formula 1 divisions, they too have programs involving superior education institutions. And as reviewed in ‘Not just luxury cars: Aston Martin diversification strategy’, the British company, at least up until a couple of years ago underwent several projects outside the automotive industry. Even if with different objectives from the ones described above, these as well are an example of how automakers can decide to drive innovation and technology research.

Each company in the luxury automotive industry has its own "niche within the niche". Being an oligopoly, characterised by a very limited, and very demanding customer base, this market requires each one of the few key players to distinguish itself creating something outstanding.

Some manage to do it better than others, and I have discussed previously the difficulties to enter this market due to its very nature.

In all this, Rolls-Royce, producing cars under the BMW Group since 2003, is definitely one of the most unique examples for many reasons. So much so, that it could almost be said it does not really compete with other firms. In those characteristics that make this brand unique in fact, there is pretty much no one coming close, and its strategy and pricing are a reflection of that.

An essential factor in this is how the company approaches the market, which is expressed perfectly by its CEO, Torsten Müller-Ötvös, words during an interview with CNBC:

"We are not lowering prices just for the sake of volume. That's not Rolls-Royce. We're in the high-end exclusivity business. We are luxury goods. Probably not cars really, our clients see us as luxury goods, and it is to be maintained like that.[...]Rolls-Royce is not at all in any trading business. We are not in the car business at all."

With these premises, it is interesting to look more in-depth into what defines Rolls-Royce's marketing mix.

For previous articles about luxury automotive company's marketing mix 8Ps check the links:

Ferrari Marketing Mix: The Prancing Horse's 8Ps

Aston Martin Marketing Mix: The Company's 8Ps

Bentley Marketing Mix: The Company's 8Ps

METHOD

The framework applied, as before, comes from the original 1981's work from Booms and Bitner's 7Ps which analyses every business as a service-based one. This fits every modern automotive company, as already discussed, and even more Rolls-Royce when considering it as a luxury goods company, not an automobile manufacturer. For this reason too, a big part of what Rolls-Royce sells is actually intangible. A lifestyle, and the brand's value that customers want to belong to.

The 8th P concept hypothesised by Goldsmith (1999) and revolving around Personalisation and segmentation claims that modern business has to be the opposite of one-size-fits-all. And Rolls-Royce's business model perfectly incarnates it. While every company in this space now applies a high degree of customisation, these extremely high standards become increasingly harder to maintain as numbers grow. Rolls-Royce keeping strict control over its growth sits on top with only Pagani (which however produces much fewer cars, just between forty and fifty a year) coming close in terms of personalisation.

PRODUCT

Whether you see them as luxury cars or luxury goods as claimed by its CEO, Rolls-Royce vehicles are in a league of their own for what they want to achieve. The brand name is synonymous with top-end luxury for a reason, and the quality has to be the best in every small detail. The best materials are picked for every component, and not a single piece that is going to be touched or used in their interiors is made out of plastic.

This attention to quality is applied to achieve also the main driving characteristic of any Rolls-Royce, its refinement and capability to isolate from the outside world. While not lacking in power and performance by any means, differently from other luxury automakers, Rolls-Royce is not concerned with numbers. Especially knowing that for most of their models, owners will not even drive the car but most of the time will be chauffeured around. A serene experience is the most important feature of the Rolls-Royce drive.

Features and options follow the previous concept. They are countless and offered to accommodate every client's preference to mostly unprecedented levels. So naturally, a big component of the product, purchasing, and ownership experience offered by Rolls-Royce consist of its personalisation range, which is discussed later on.

The design language is very recognisable as well. It is essential and clean. So much so that at Rolls-Royce it is said that every model's design can be captured with just three lines. At the same time though, each design is very imposing and conveys Rolls-Royce's stability and luxury character.

The product line consists of five main products. Starting from the Phantom, is a 4-door saloon, full luxury flagship, and thus the most expensive, and the largest. It is the quintessential car for the owner that leaves the driving to the chauffeur.

It follows the Ghost, which is still a full-fledged 4-door luxury car but slightly smaller than Phantom, and conceived to engage the driver more. The latest model to be renewed, launched in 2020 according to the concept of Post Opulence, and it is extremely being the best selling model of the company's history so far. In its statement, Rolls-Royce claimed that more clients than expected actually liked to drive their own Ghost, and for this reason, they paid attention to provide an engaging driving experience as well.

Talking about sales figures, the third model is the Rolls-Royce Cullinan, the latest introduction in terms of vehicle types. The Cullinan, in fact, followed the SUV popularity trend bringing the Rolls-Royce luxury into this vehicle in high demand in the current market. As for other automakers in similar segments, since its launch, in the last two years, the Cullinan alone accounted for around 50% of the total sales of the entire company.

Dawn and Wraith are too fairly recent addition to the line-up. 2-door, 2+2 coupé and convertible versions of Rolls-Royce's ultimate grand tourer. These as well are meant to be driven by their owners, offering a sportier and more engaging drive while still preserving every luxury feature.

The last three models mentioned Cullinan, Wraith, and Dawn are offered also in their Black Badge versions. The Black Badge upgrade usually includes a slight increase in power, and some aesthetic changes such as the use of carbon fibre for some interior components, and the exterior chrome details (including the Spirit of Ecstasy) painted in black.

Finally, the two 4-door Phantom and Ghost instead have both an extended wheel-base version that is popular in certain countries such as China.

*Source:Rolls-Royce Media

The pinnacle of craftsmanship for the British company is Coachbuild. Access to this service is granted only to, according to Rolls-Royce, ‘individuals of extraordinary achievement, culture, and vision'. Here these highly selected clients working closely with the Rolls-Royce team can create their very own car. Unique, or extremely limited pieces that directly become part of the brand's history due to their rarity. Two have been the examples of this within the last decade: The Sweptail and the Boat Tail.   

Every new Rolls-Royce comes with a 4-year warranty that covers unlimited mileage, as well as servicing, repairs, and maintenance.

As for the accessories, Rolls-Royce offers a wide range of specially designed objects to complement the cars. From luggage sets to pic-nic sets, lifestyle items, every piece's quality is of course up to standard with the rest of the company's production.

PRICE

As quoted from CEO Torsten Müller-Ötvös, pricing strategy is essential to Rolls-Royce. None of their products will ever be offered below the current price range. And it is again a unique price positioning, as it is significantly higher than that of any other luxury company.

The ‘entry-level' model in the line-up is the Ghost which starts at £233,235, follows the Wraith at £258,000, and the SUV Cullinan at £264,000. The most expensives of the line-up are the convertible Dawn, MSRP £282,000, and last of course the Phantom for £363,300.

This is another example of Rolls-Royce being on a different level from any competition. Bentley and Mercedes' luxury division Maybach most expensive models which are usually compared to Rolls-Royce are sold for starting prices of £157,900 and £162,390 respectively.

Naturally, the prices mentioned are all before options, which can easily amount to an additional £100,000.

*SourceImgur andQuita Lease

This will most likely not happen to Coachbuild models mentioned above that initially sell for several million (Boat Tail was indicated at a price of around £20 million with only 3 units to be built) and thanks to their rarity should at least hold their value.

PLACE

Rolls-Royce sells through a network of 138 authorized dealers spread in 50 different countries. Like its sales numbers, the dealer network too is slightly smaller than that of other companies in similar segments, which sell their cars through networks of 150-160+ dealers.

As seen previously, in the case of Rolls-Royce too each dealer is located strategically in areas with a higher density of high-net-worth individuals or in ‘cluster areas' where other luxury automotive dealerships are located. The image below shows a dealers' area of London in Mayfair.

PROMOTION

As expected, the majority of Rolls-Royce's communication is focused on the luxury aspect of its products, the search for perfection, and for great achievements, which is what makes it unique. This is expressed clearly already in the company's vision statements:

• Inspiring Greatness. For over 100 years, Rolls-Royce Motor Cars has pushed the boundaries of luxury, creating new realities both within and beyond automotive design.

• Our strive for perfection guides us.
  Rolls-Royce is an everlasting expression of the exceptional, where everything we do reflects our persistence and commitment towards the remarkable.

The strategy is naturally consistent throughout all its online channels. Entire sections of the website hardly mention or show cars. Focus is again on the ownership experience, and in getting the clients involved in that unique lifestyle.

This is done, as it is common in today's industry segment, through exclusive eventsmeant to enrich the brand's value and increase loyalty. Some of these are organised to surprise owners, which become effectively part of the brand's family, with exciting and unique journeys in selected locations. Then there are cars presentations, history revivals, and even art-related events.

Artis in fact another important component of Rolls-Royce's communication strategy. A theme that is found in numerous activities. One example is Muse, a program with which Rolls-Royce supports artists working with moving imagery and using different technological means. Another is the ‘Evelina Art for Allergy X Dine on the Line' event, a philanthropic initiative to support medical research organised with the collaboration of Rolls-Royce and artist Marc Quinn.

 

*Source:Rolls-Royce Media and Jake Curtis

The social media pages alternate car-related content to art and inspirational collaborations with important personalities or people of great success in different paths of life. These too contribute to creating a consistent image for the brand.

PARTICIPANTS

Participants are one of the most important tiles of this complex mosaic. In an industry that, especially after the pandemic, is looking more and more at how to make things easier and faster through digitalisation and automatic processes, Rolls-Royce and the rest of the luxury segment go in the opposite direction.

The contact with clients is extremely important as it is an integral part of the brand experience. It starts in the dealer with the initial specification of the vehicle and then varies depending on the involvement of the clients on further steps. When collaborating with the Bespoke division, buyers enter in direct contact with artisans at Rolls-Royce. A staff of highly-trained professionals taking care of every detail.

The final touch added in early 2020 is Whispers, the app for Rolls-Royce owners that features social functionalities for the community, a store, and exclusive experiential offerings by the company itself.

PHYSICAL EVIDENCE

Everything in Rolls-Royce's physical (and digital) environment reflects the brand's search for luxury, art, and perfection.

From the showrooms and dealers to the ateliers, to locations and settings where events are located everything exudes luxury and opulence. Clients are welcomed and can spend time in dedicated lounge areas or ateliers equipped with proper working spaces to work closely with Rolls-Royce staff to specify their car's customisation.

 

*Source:Rolls-Royce Media andH.R. Owen Rolls-Royce

PROCESS

The process is changing. Technology enriches the experience for clients in many ways, the first of which is the increasing power and accuracy of car configurators. The pillars of these steps, which are partially described in previous sessions, remain the same. Policies and best practices are maintained to create the best ownership experience.

Length and involvement depend on the customisation level required by each client. Some might just choose ‘basic' features, while more demanding ones could specify unique paint colours or bespoke embroideries, up to those rare lucky who access the Coachbuild program. On average, however, the whole process takes around six months, during which each car component is carefully handcrafted.

PERSONALISATION

As it is obvious by now, this is a big part of what Rolls-Royce is all about nowadays. Customisation options range from the general choices like the bodywork paint to the smallest detail, such as the steering wheel spokes, down even to the accessories like the umbrellas hidden in the door panels.

Rolls-Royce's very own division Bespoke takes care of every detail of the car specification at such a level that is rarely seen anywhere else. There are countless examples of the level of craftsmanship reached.

For instance, sales managers can use dedicated lamps to show how different lights depending on the locations, season, or moment of the day, would hit the car paint colour. When specifying the veneer for the interiors, clients can even select the piece of wood to use. There is then the famous starlight headliner, for which Rolls-Royce artisans using over 1,000 fibre optics create a bespoke pattern mimicking specific constellations chosen by the client.

*Examples of ‘Phantom Galleries', interiors, Starlight Headliner, bespoke details, Boat Tail, Source:Rolls-Royce Media

Even the art theme is found again in the personalisation process. The fascia running almost the entire width of the Phantom dashboard is called ‘The Gallery'. For this piece enclosed in glass, clients can commission bespoke art pieces to include and showcase in their cars.

The ultimate level of this service is, of course, the Coachbuild program mentioned before which gave life to unique projects like Sweptail and Boat Tail where even the exterior design is unique and comes from clients' inspiration.

As wealth increases in many countries, the luxury segment of the automotive industry is likely to see increasingly high levels of customisation developing due to increased competition and demanding clientele. Rolls-Royce is well-positioned to deliver a service as no other company does in this space. Even the Coachbuild projects could become more ‘frequent' fundamentally changing the industry as we know it.

Just two days ago, ahead of the presentation at the IAA Mobility in Munich, Porsche unveiled a new electric car concept, the Mission R.

The last time we saw a car with a similar name, it was a few years ago and the model was the Mission E, which turned out to be the current Taycan, that in some markets, one above all the US, is already outselling the iconic 911. 5,367 EVs sold in the first half of 2021, against 5,108 911s in the single market. In Europe reaches 19,822 units sold, staying just behind the 20,611 of the 911, but selling almost double that of the 718 Cayman/Boxster.

*Porsche Mission R. Source:Porsche Media

This time, however, the subject is quite different. The Mission R, in fact, is an electric racing car, or at least it is intended to be (as of now, it features characteristics that are not approved by the FIA and would be considered illegal in racing). 1088 bhp in qualifying mode from the two electric motors (435 in front, 653 in the back), 680 in race mode which thanks to the 80 kW/h battery pack stored at the centre of the vehicle should ensure 30-40 minutes of action on the track. Recharge is claimed to reach 80% in just 15 minutes thanks to 900-volt technology and fast charging capabilities.

This concept hints at Porsche’s single-marque one-make racing future, for series like the Carrera Cup, and could arrive as early as 2025. But according to other sources, due to its dimensions, it could represent the future of the 718 Cayman line, very similar in length, height, and width, if the 911 will be the last to maintain the combustion engine.

The car, as concepts do, showcases new ideas and technologies, from cameras showing the driver from different angles to the new sustainable composite material used on the exterior instead of the carbon fibre.

The Mission R is just the latest of a long list of beautiful Porsche concepts. A few months ago, at the end of 2020 the German company, with ‘Porsche Unseen’ even revealed not one but fifteen concept projects that had been developed since the mid-2000s and kept ‘under lock and key’.

*Porsche 917 Concept

In this important moment of transition for the automotive industry, luxury OEMs are, at different paces, moving toward vehicles electrification, autonomous driving, improved connectivity, and increasingly sophisticated ADAS.

There are substantial differences though in how all these areas of development are approached by the different automakers. This is something that, in the long-term, could reshape the industry and has partially done it already.

But what are these different strategies? And how are they changing the market?

ELECTRIFICATION

Electric vehicles are actually older than combustion engine ones. Nowadays, after a few marginally successful attempts that ultimately did not stick, Tesla, pushed by innovation and new environmental restrictions to ICEs, managed to establish the electric vehicle globally. From there other players, new or already well-established, set off in pursuit of the American firm as it continued growing in popularity and appeal especially with the new generations.

Naturally, the mass market, even in the premium segment (especially being Tesla positioned exactly in it), was impacted first. But the top-end luxury market is quickly following as well.

*The recently released Tesla Model S Plaid. Source: Tesla

 

LUXURY AND PREMIUM AUTOMOTIVE COMPANIES EV MARKET ENTRY

*Ferrari, McLaren, and Koenigsegg 'EV Model Segment’ column is left empty because while an upcoming EV is confirmed for the first two, the third is just a future option, and neither of the three firms released details on it.

From the table, some interesting market dynamics can be identified. First, established manufacturers always adopt either a gradual or slow strategy to enter the EV market. This is pretty straightforward. These companies have been improving on their core expertise for years, some even from the very beginning of the industry, over 100 years ago. This means that they will need to gradually redirect facilities, investments, capabilities, and staff, but they also have a heritage to preserve. This is especially true for luxury automakers for which the brand and the highly selected customer base expectations are crucially important as highlighted in the survey conducted for the Ferrari Brand Market Potential Analysis.

The only exception here is represented by Lotus, which out of its line-up of ICE sports cars, in 2019 introduced the full-electric hypercar Evija. Lotus as a brand exists since 1948, but in 2017 the Chinese Geely took a majority stake in the company, effectively taking control of it. Geely had already entered the EV market, with black cabs, and Volvo’s electric cars division Polestar. This overall direction for the group likely led to the birth of the project codenamed Type 130, later renamed Evija.

The second trend that can be observed is the vehicle’s class choice. All the established manufacturers using a gradual approach (which as said is almost every company featured) are entering the segment with a GT car or an SUV. This is most likely again due to clients’ expectations and cars’ value proposition.

GTs and SUVs are developed to be comfortable for long trips, exciting when required, yet relaxing to drive and simply be in. Few people in the market for a luxury or premium GT or SUV will be concerned with its driving capabilities on a track, which is exactly what sports cars are for instead. For this reason, so far we got the Porsche Taycan, the upcoming Maserati Granturismo, Lamborghini’s fourth model which will be an electric GT, the Audi E-Tron, the Mercedes EQC, and BMW iX3 (it is interesting the note that the latter three, followed up soon after with their own GT EV, the E-Tron GT, the EQS, and the i4 respectively).

Ferrari’s and McLaren’s upcoming electrified cars remain a mystery for now. So while it is possible to assume they too will release a GT model as their first electrified car, to preserve their driving experience with the combustion engine as long as possible, they could also pick a more radical approach for different reasons. Ferrari now enjoys the most diversified range it ever had (with the SUV Purosangue joining it soon), so an electric sports car would not be a substitute but more of an option to the combustion engine, for those clients that still look for a more traditional Ferrari driving experience. McLaren instead, being much more focused on sports cars, with no SUV and a single GT model, but a varied range of mid-engine supercars could choose to offer an electric option to these as well.

On the other hand, start-ups who entered directly the EV segment so far did it through top-end hypercars. High-performance cars in this segment are almost exclusively a prerogative of luxury automakers, while in the premium segment SUVs and GTs are preferred. Naturally, the use case for each car type makes the OEMs choice clear. It is the case of Rimac with the Concept One, Pininfarina with the Battista (based on the Rimac’s platform), Nio with the EP9, and Estrema with the recently presented Fulminea.

Not having the “constraints” of a large established customer base gives these companies the freedom to reinvent the product, and revolutionise the market itself even. They don’t need to respond to anyone’s expectations and for this reason, they can look for the next important step that allows them to establish themselves as serious players as it happened for Rimac and Tesla.

Christian Von Koenigsegg said it best in an interview when talking about its company:

“For example, with the Regera, I don’t see any of the other established brands, daring to remove shifting of gears. It’s such a fundamental thing to take away from a sports car, that I think it’s only Koenigsegg that could make that decision. And I’m very confident about the decision […] We take more freedoms like that”.

Most likely, in fact, the main reason why Koenigsegg has not yet started the development of a full-electric car is the powertrain constraints. One above all the weight. Apart from that, with every new model so far, they always introduced some form of unprecedented technological innovation.

These cars often become the weapons of choice of the start-ups as they are also extremely powerful testing platforms and marketing tools. A fast and ground-breaking supercar allows the OEM to test new and expensive technologies that the car’s pricing can cover. Technology that can later trickle down to mass-produced models, once the production costs drop. As for the marketing aspect, a high-performance vehicle will always attract more attention giving the company a reputation that a regular car would never give if the project is successful.

AUTONOMOUS DRIVING, CONNECTIVITY, AND ADAS

In a similar way to what happens for EVs, established and young companies are also likely to approach other aspects of the new automobiles’ development differently.

Start-ups often enter the market more as tech companies than automakers. Established brands, on the other hand, usually manage these developments through incremental improvements and implementations. The company structures themselves are likely to be less suited or lacking the talent for the latest tech development that is usually one of the EV start-ups’ strengths.

Specific areas of research are the further level of autonomous driving, constant OTA updates, improved tech hardware, a better ecosystem with personalised services for owners to increase brand loyalty, AR and VR, improved functionalities, and bespoke services through developed through sensors and camera systems.

When it comes to autonomous driving, of course, a distinction must be done as well between everyday vehicles and sports cars. For the latter, autonomous driving capabilities would defeat the purpose of the vehicle itself, and not only while on track. So while there is less pressure for sports cars manufacturers, it is likely to see such automation on these cars too in the future.

On the other hand of the spectrum, however, as these capabilities become more complete and the systems popular, we are also likely to see companies born exclusively to produce self-driving vehicles. This not only represents a more radical approach, but much like EV OEMs such as Rimac and Tesla, it has the potential to threaten even more the current ownership model directing it even more toward a fully shared mobility.

AUTONOMOUS VEHICLES WILL TRAVEL ABOUT 66% OF TOTAL PASSENGER-KILOMETRES IN 2040

CONCLUSIONS

The industry is changing faster than ever, and the customers’ preferences are evolving as well. Younger generations are increasingly attracted by electric mobility and its unmatched performance capabilities. But they are also more open to sharing with others, and more interested in proper experiences over mere vehicle ownership.

This condition presents different challenges for both new and established players. On the one hand, long-standing companies can take advantage of their expertise in offering a more refined and bespoke service, along with the valued brand name. On the other, new players have the opportunity to try new and innovative approaches right from the start adopting solutions that might not be available for structured companies that are less agile and have more cumbersome processes. Not having the pressure of a long heritage and demanding customer base expectations can become an advantage too in this context.

Ahead of the 2022 season, which will bring significant changes to the rules, Formula 1 reaches half of its longest season with 23 races initially planned.

Thanks to an agreement between the owner Liberty Media and the FIA, the sport has recently changed its rules introducing the budget cap of $145 million that was teased for a while. Its introduction initially thought to be gradual was accelerated due to the pandemic impact. Furthermore, the current limit should receive more gradual cuts in the next two years.

Teams over the years have applied different strategies and business models to ensure their survival and thrive in the most technologically advanced sport of all. This might seem a fairly straightforward task for larger teams owned by big automotive manufacturers, especially after the budget cap was introduced to level the playing field. But that is surely not so for smaller, independent teams. So, as the sport became more complex over the years, these firms have used different solutions.

Let’s see what they are and how effective they have been so far.

INCOME FROM F1

Naturally, part of the revenues of each team comes from the sport itself in the form of the Concorde Agreement. According to this agreement, every team at the end of a season gets an equal share of the F1 earnings’ percentage, for participating in the two previous seasons. Additionally, another part of the F1 teams’ revenues is calculated according to the ranking order at the end of the season, with the winner taking the largest share and the others getting less at each step of the ranking.

FORMULA 1 PRIZE MONEY SHARE DEPENDING ON THE FINAL CHAMPIONSHIP STANDING (%)

*Source: The Race

Along with these two shares of the F1 revenues, some teams have access to other money thanks to their status within the sport. While specific details of the agreement are not disclosed, some others have been made public.

According to The Race, Ferrari as the longest-standing F1 team earns an additional share, being the only firm that has taken part in every single season. Its political and marketing influence on the sport is significant. Along with that, with the new rules, teams that have a special heritage in the sport, or have classified among the best three over the past few years, have access to a 20% share of what F1 earns above the $650 million threshold. These teams are Mercedes, Red Bull, McLaren, Williams, Renault (now renamed Alpine), and again Ferrari.

Overall, despite still having larger teams earning significantly more than others, the system should ensure a much fairer distribution.

The second source of income that every team enjoys, even if to a different extent, are the sponsorships. Every team each year receives money from 10 to 20 sponsors that pay money to have their name displayed either as a title partner or simply in different spots on the car. These deals are negotiated individually with the teams depending on the kind of exposure a company is looking for and the time the car is shown on TV or social media (naturally, this again goes in favour of larger and winning teams).

But there is more.

*Formula 1 2021 Drivers line-up

This is the third article within the “Marketing Mix” series, and this week is about Bentley.

I previously discussed Ferrari and Aston Martin, applying the same analytical framework to each brand to highlight their respective strategy, important developments, and peculiarities. Here you can find the previous articles regarding Ferrari and Aston Martin:

Ferrari Marketing Mix: The Prancing Horse's 8Ps

Aston Martin Marketing Mix: The Company's 8Ps

The first characteristic that distinguishes Bentley these days, is that it certainly is one of the most interesting brands in the luxury segment in terms of transition toward electrification.

Bentley was, in fact, recently put under the management of Audi, like Lamborghini before, thanks to the numerous synergies with it. Shared components and platforms with both Audi and Porsche are important efficiency factors. With it comes also the fast transition to electricity and a more sustainable future.

As highlighted in a review of the automakers' R&D spending, VW is by far the automotive group investing the most right now, and the majority of it is dedicated to ACES (autonomous, connected, electrified, shared). Bentley follows this effort with its Beyond100 Strategy announced in 2020, and aimed at establishing the British marque as the leader in sustainable luxury mobility. The symbol of this change is the EXP 100 GT concept, which won an important GQ award last year as the best concept car.

This decided change of pace naturally influenced Bentley's marketing and communication strategy.

METHOD

The framework used is the Marketing Mix 8Ps, applying Booms and Bitner's 7Ps (1981) and Goldsmith's 8th P (1999) methods. The framework is described more in detail in the first article of the Series linked above, about Ferrari's marketing mix.

PRODUCT

Bentley's product line currently offers three models, Bentayga, Continental GT, and Flying Spur. An SUV, a quintessential Grand Tourer, and a fully-fledged 4-door Luxury saloon.

The range might seem fairly limited compared to the other two brands analysed previously, but, while the others offering spans from performance to luxury cars, Bentley's product-line is much more focused on top-level luxury without overlooking significant performance for every model.

Also, each one is offered in various specs and trims. Most of them are introduced with the Bentayga that can be ordered in four different versions. The base model V8, the hybrid, which is more energy-efficient and still preserving its performance, the Speed, the fastest of all four, and the recently introduced S which improves on vehicle dynamics and looks sportiness.

As for the others, the Continental GT has three versions, V8, Mulliner, and Speed all coming either with the hard-top or as convertibles, and the Flying Spur, with three engine options, a V8, a W12, and a V6 Hybrid.

*this graph includes also the limited edition Bacalar (12 units) unveiled in 2020 and relaunching Bentley's customisation division Mulliner

The line-up is following the Beyond100 strategy according to which every model will have a hybrid option by 2023. Also, Bentley's first full-electric vehicle should arrive by 2025 and will most likely be an SUV too. Since its introduction, in fact, the Bentayga has been by far the most successful model. Its sales have consistently accounted for around 50% of the total. In the last two years alone, 9,178 units out of the 23,123 produced were SUVs.

Like the existing one, the new model will most likely use Audi's shared platform. Either MLB (Modularer Längsbaukasten, German for Modular Longitudinal Matrix) on which are developed the Bentayga, the Urus, the Touareg, Porsche's Cayenne and Audi's Q range, or MSB(Modularer Standardantriebsbaukasten, modular standard drivetrain matrix) used for Continental GT, Flying Spur, Panamera as well as the electric Porsche Taycan and Audi E-tron GT.

Bentley's product line, as the brand, is at the absolute top of the market for reputation, materials' choice, and craftsmanship. Its most direct rivals are Rolls-Royce and Mercedes' division, Maybach. Bentley however maintains also its racing heritage, so, all of its vehicles, especially the sportier ones, are capable of noteworthy performance with the Continental GT Speed at the top, producing 650 bhp, for a top speed of 208 mph and a 0-62 mph time of 3.5 seconds.

The design language is extremely coherent across the whole line and it has been so over the last few decades. Clear design cues such as the double rounded headlights and the straight, muscular lines with an imposing stance, proper of a luxury vehicle are all unmistakeably Bentley. All of this though does not mean a lack of creativity or innovation. The design has been skilfully updated over the last generation to modernise each models' sculpture.

And the same happens inside. Every Bentley's interior features carefully crafted metal components, paired with refined wood veneer (sustainably sourced as proudly claimed by Bentley) to offer the best quality possible, but all on a very modern interpretation. From the comfort and luxury features to the now-famous 3-face rotating infotainment display.

Finally, every new model comes with a three-year warranty and a wide range of accessories and options to upgrade. A collection of luxury lifestyle items and apparel is offered as well to create a more immersive brand experience.

*Bentley branded accessories sold in the brand's Boutiques. Source:Bentley Media.

PRICE

The price positioning is at the top end of the market. With the Bentayga being the cheapest and starting at around £140,000, with the hybrid version slightly less expensive and the speed version going up to slightly over £180,000. Follows the Continental GT with an entry-level price close to £160,000 and £175,000 for the convertible. This can go up to an estimated £200,000 for the speed version.

Finally, the luxury Flying Spur price varies between £168,000 and £180,000. All of these are before options, that can drive the car easily over the £200,000 mark, especially if they are part of a limited edition. For instance, the Continental GT First Edition costs £34,000 more than a regular one.

In general, Bentleys are priced significantly lower than its direct competitors Rolls-Royces, which all start well over £200,000, and reach the £300,000 with the flagship Phantom.

Prices though are aligned with those of other manufacturers' cars in a similar segment, such as Maybach GLS for an SUV, and Aston Martin DB11, or Ferrari Roma as Grand Tourers.

Also, Bentley, last year introduced the ‘Certified by Bentley' program. This includes servicing, warranty, and certification for pre-owned Bentleys. The program should boost the pre-owned market and limit Bentleys' depreciation rate which has been quite serious for some models, affecting the brand's reputation. Mid-2000s Continental GTs can be bought today for as low as £20,000 in the UK, which surely hurts the cars' perceived value.

PLACE

Bentley's manages its distribution through a franchise dealer network. Each dealer has to go through a strict application process and satisfy specific conditions to qualify.

As it usually happens, especially in big cities, these dealers are located in areas with a high density of high-net-worth individuals, where other luxury automakers' dealerships are clustered or within important business districts. In smaller urban centres dealers might be simply located in automotive dealership cluster areas.

Two examples are London and Paris, where the dealers are located respectively in Berkeley Square and within the 8th arrondissement. Both areas enjoy the characteristics described above.

*Bentley's dealerships areas in London and Paris

The virus outbreak forced automotive companies to find alternative ways to keep their relationship with clients and provide the proper services. Bentley implemented numerous services within the two apps ‘My Bentley' and ‘Bentley Network'.

PROMOTION

Bentley built its communication around the new sustainability mission with its ‘Brand Manifesto' stating all the steps toward carbon-neutrality. This and the unparalleled luxury are the two pillars of Bentley's marketing strategy.

Another characteristic that has been constantly promoted is the racing heritage of the marque. Bentley has used its history and success in racing and endurance on different occasions, with the first participation to Le Mans dating back to the 1920s. The latest and more innovative of these are the official participation in an E-sport series, and the steering wheel for both the Continental GT3 and the simulator developed in partnership with Fanatec.

Motorsport is still nowadays one of the main activities of the brand and a major promotion channel. Bentley participates through customer racing teams in different GT racing classes with its Continental GT3.

*Three main elements of Bentley's promotion, The EXP 100 GT EV concept, the Fanatec Steering wheel, and the GT3 race car. Source:Bentley Media

Built around the brand's pillars and ownership experience, Bentley organises also a series of events for both clients and prospects. They can range from car launches to driving experiences, to motorsport and lifestyle events. Naturally, venues and organisation reflect the luxury values of the company, including cocktail parties, music, and special presentations. Another range of activities is dedicated to enthusiasts as well, where they can take part in factory tours, and visit showrooms featuring the entire range and personalisation area.

Finally, along with all the more ‘traditional activities', a large part of the promotion nowadays happens through social media channels. Bentley enjoys a strong following across all the major platforms, but most of all the online visibility is given by the numerous channels of reviewers and enthusiasts who publish daily content about automotive. Naturally, Bentley, thanks to its unique characteristics of market-leading luxury combined with sportiness is always among the major players in this market segment, and a quick shift toward electrification could help the brand distinguish itself even more.

PARTICIPANTS

The points of contact between customer and brand are numerous. As mentioned before, the relationship develops through events, and direct experience at the dealerships, for example when specifying a car's personalisation at Bentley's Mulliner division.

New points of contact are added thanks to the expanding digital channels, apps, and other services for clients.

Employees too, go through a highly selective process of selection when applying and a consistent number of Undergraduate programs are also offered. Generally, the environment is judged positively and according to LinkedIn data, the average tenure is 6.7 years which is significantly higher than the majority of its competitors.

PHYSICAL EVIDENCE

Bentley is regarded as the epitome of automotive luxury, and everything around it reflects this image. Franchised dealerships strictly respect the brand message from the employees' outfits to the furnishing and overall design of the spaces.

There is a proper sense of opulence as one feels while sitting in an actual Bentley car. Good examples of this are the Global Flagship Showroom opened in Dubai opened in 2016, and the CW1 House in 2014, a showroom showcasing Bentley's models as well as a dedicated space for personalisation, Mulliner room, and boutique.

*Bentley Dubai Flagship, Boutique, and Mulliner Department interiors. Source:Bentley Media

The Mulliner department reflects the brand refinement by showcasing a range of options that the client can pick from when specifying his/her bespoke car. Similarly, the boutiques display a wide range of branded items and lifestyle products all in an up-scale and refined environment.

PROCESS

The processes and customers involvement is changing in automotive. On the one hand, digital systems are more common than ever, due to a decisive boost during the pandemic lockdowns. With digital services, clients can get a more streamlined service and automakers can gather more data to keep improving their processes, products, and services.

When it comes to luxury goods, however, a higher degree of involvement by the company is not only preferred but also a key factor distinguishing a high-end service. For Bentley, this translates into the specification of bespoke vehicles through the Mulliner division or the new ‘Certified by Bentley' pre-owned program. Without reducing the points of contact also, digitisation will enable automakers to create more bespoke on-demand content for each client, as well as improve the quality and range of services with the use of more advanced graphics engines.

PERSONALISATION

As stated on other occasions, an increasingly customer-centric luxury market where personalisation and rarity have become the true luxury, caused an important development in the luxury automotive segment. Every major luxury automaker has improved its customisation service, and many went even further creating few-off or unique pieces for super-wealthy clients.

Bentley, which was already offering a high degree of personalisation on its models, announced the return to the coachbuilding traditions at the beginning of 2020 with its Mulliner Bacalar, and open-top, 2-door, super rare grand tourer (only 12 units will be produced).

*Bentley Mulliner Bacalar. Source:Bentley Media

The division offers different limited runs of special editions, which are predesigned with some unique specifications, like the Pikes Peak. Mulliner is also constantly expanding its materials range. One of the latest is a tweed door finish available on all three models.

The true next-level innovation in terms of making the customer experience more personal and unique is the introduction of Adaptive Music Technology. Bentley partnered with LifeScore, which through an algorithm uses the vehicle's inputs like acceleration, or engine's RPM, to change the music accordingly in real-time. The same technology was introduced by Supercar Capsule's Founder Andrea Sensoli during our interview, but it is definitely a first for a car, distinguishing once again Bentley as an innovator and an absolute leader of the luxury segment.

A while back, I wrote an article drawing the situation of the Chinese automotive market and trying to frame the buzz around the new energy vehicles growth in the world’s largest automotive market.

You can find it here.

The observation started from different media outlets discussing the rapid growth of Chinese automakers in the EV segment, while western companies were being left behind. The investments and specific development areas however gave back a different picture. Three years later, some trends have remained unchanged. The graph below expands the data gathered in the previous article about R&D spending by the different major manufacturers in Europe, the US, and Asia.

MAJOR AUTOMOTIVE GROUPS R&D INVESTMENT IN 2017 AND 2019-2020

*Source: Automakers’ financial reports

On Monday, July 5th, 2021, Rimac Automobili held a live event during which were announced a series of changes at the corporate level that represent historic milestones for the young Croatian company.

Mate Rimac, on the stage, revealed the birth of Bugatti-Rimac, a strategic Joint Venture between his company, now the leader in the super sports electric vehicles, and the long-standing high-end French automotive brand part of the VW Group.

The discussion began around 18 months back, and after a while rumours started to spread on the internet about VW selling Bugatti to Rimac, and Porsche simultaneously acquiring a higher stake in the EV automaker.

There are not many details about what went on behind closed doors, but on Monday the result of this discussion was finally revealed. So, let’s have a look at what are the deal’s implications and why it is important in this moment of the luxury automotive market.

RIMAC’S NEW STRUCTURE

*SourceRimac Media

This is Rimac's updated corporate and shareholding structure as announced during the event.

*SourceRimac Media

It is from last week, an important announcement by Bentley regarding a further step into the world of e-sports with a unique initiative and the collaboration with an extremely active player within the sector: Fanatec. But first, let’s see what has been going on so far.

Back in 2020, right after the pandemic hit, the world of motorsport experienced a significant and sudden change. Sim-racing, like official virtual competitions in numerous other fields and videogame genres, was already on the rise. But the global lockdowns, and other health and safety measures put in place to contain the spread of the virus gave the booming e-sports industry a further push.

The mean of choice for this were the various Livestream platforms on the internet. Countless personalities, both born online and coming from real racing (such as almost the entire new generation of Formula 1 drivers) found themselves spending more time involved in e-sports events.

In addition, leagues and brands joined the movement organising major events and racing leagues like never before. Along with Formula 1 continuing its official e-championship, FIA WEC Le Mans Virtual 24 hours was also held for the first time.

The audience increase is clearly reflected in the number of views and hours watched recorded by Twitch for major racing simulators such as iRacing, Assetto Corsa, and Assetto Corsa Competizione.

IRACING TWITCH VIEWERS AND HOURS WATCHED

ASSETTO CORSA TWITCH VIEWERS AND HOURS WATCHED

ASSETTO CORSA COMPETIZIONE TWITCH VIEWERS AND HOURS WATCHED

During the Cannes Lions Awards that are being held between the 21st and the 25th of June, on the festival’s website has been published a panel discussion about a very interesting partnership started last year between McLaren, Coca-Cola, and Amazon.

The first two have been partners since 2018 when for the first time in history the Coca-Cola logo appeared on a Formula 1 car. On this occasion, however, the project involved also a second American giant: Amazon. This resulted in ‘Driven to Deliver’, an entertaining video featuring the two McLaren F1 Team drivers Lando Norris and Carlos Sainz (who has since moved to Ferrari) driving around in a Coca-cola-branded 600LT and delivering Amazon parcels and Coca-Cola Zero bottles to people.

*Carlos Sainz and Lando Norris on the set of Drive to Deliver. Photo byAmazon

Last weekend, Ferrari held a fashion showfor its renewed clothing line right at the factory, beside its assembly lines. The event announces Ferrari's shift toward an even higher market segment in the fashion industry, and the brand’s attention toward a new audience. And this is not all.

*Ferrari fashion show in Maranello. Source:CNN